How Pharma Cos. Can Evaluate Alliance Agreements' Validity

Law360, 2020

In an article for Law360, Analysis Group affiliate Louis Berneman, Managing Principal Alan White, and Vice President Anne Catherine Faye discuss how brand and generic pharmaceutical companies can determine whether alliance agreements with each other are likely to meet validity standards in courtroom settings. They consider the 2013 US Supreme Court decision in Federal Trade Commission v. Actavis, which held that alliances resulting in reverse payments may be anticompetitive when they involve large and unjustified payments. The Supreme Court left it to lower courts to apply the rule of reason to reverse payment arguments, which has resulted in conflicting decisions, hence the need for companies to take their own alliance agreement vetting seriously.

The authors note that in times of economic uncertainty, such as during a pandemic, shareholders may press pharmaceutical companies to close deals so quickly that alliance agreements are not fully vetted. The authors explain that this puts companies at risk of having the legitimacy of their alliances disputed, and that evaluating an agreement’s legitimacy requires extensive real-world experience in structuring, valuing, negotiating, and drafting the contract’s terms. 

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Berneman L, White A, Faye AC